7,090
Views
10
CrossRef citations to date
0
Altmetric
FINANCIAL ECONOMICS

Managers’ financial practices and financial sustainability of Nigerian manufacturing companies: Which ratios matter most?

ORCID Icon | (Reviewing editor)
Article: 1724241 | Received 22 Apr 2019, Accepted 27 Jan 2020, Published online: 06 Feb 2020

References

  • Abdelkarim, N. (2002). The long-term financial sustainability of the Palestinian NGO sector: An assessment. Study Commissioned by the Welfare Association Consortium. Retrieved from https://www.icnl.org/wp-content/uploads/Palestine_financialsustainability.pdf
  • Adeyemi, B. (2011). Bank failure in Nigeria: A consequence of capital inadequacy, lack of transparency and non-performing loans? Banks and Bank Systems, 6, 1.
  • Ali, A., & Yousaf, S. (2013). Determinants of cash holding in german market. IOSR Journal of Business and Management, 12(16), 28–23. doi:10.9790/487X-1262834
  • Alli, F. (2012). How to achieve 10% real sector contribution to GDP by 2015 – Stakeholders. Retrieved from https://www.vanguardngr.com/2012/07/how-to-achieve-10-real-sector-contribution-to-gdp-by-2015-stakeholders/
  • Altman, E. I. (1968). Financial ratios discriminate analysis and the prediction of corporate bankruptcy. Journal of Finance, 23(4), 589–609.
  • Altman, E. I. (1993). Corporate financial distress and bankruptcy (2nd ed.). New York: John Wiley & Sons.
  • Altman, E. I. (2000). Predicting financial distress of companies: Revisiting the Z-score and ZETA® models. In Handbook of research methods and applications in empirical finance. NYU Stern School of Business. (pp. 428–456). ( September 1968). doi:10.4337/9780857936097.00027
  • Altman, E. I., & Hotchkiss, E. (2007). Corporate financial distress and bankruptcy. doi:10.1002/9781118267806
  • Altman, E. I., Iwanicz-Drozdowska, M., Laitinen, E. K., & Suvas, A. (2014). Distressed firm and bankruptcy prediction in an international context: A review and empirical analysis of Altman’s Z-score model. SSRN Electronic Journal. doi:10.2139/ssrn.2536340
  • Amouzesh, N., Moeinfar, Z., & Mousavi, Z. (2011). Sustainable growth rate and firm performance: Evidence from Iran stock exchange. International Journal of Business and Social Science, 2, 23.
  • Aremu, M. A., Ekpo, I. C., & Mustapha, A. M. (2013). Determinants of banks‟ profitability in a developing economy: Evidence from Nigerian banking industry. Interdisciplinary Journal of Contemporary Research in Business, 4(9), 155–181.
  • Arora, L., Kumar, S., & Verma, P. (2018). The anatomy of sustainable growth rate of Indian manufacturing firms. Global Business Review, 19(4), 1050–1071. doi:10.1177/0972150918773002
  • Asaleye, A. J., Adama, J. I., & Ogunjobi, J. O. (2018). Financial sector and manufacturing sector performance: Evidence from Nigeria. Investment Management and Financial Innovations, 15(3), 35–48. doi:10.21511/imfi.15(3).2018.03
  • Atoyebi, K. O., Okafor, B. O., & Falana, A. O. (2014). The global financial meltdown and its effects on manufacturing sector : The Nigerian perspective. Journal of Economics and Sustainable Development, 5(6), 78–90.
  • Babalola, Y. A. (2013). The effect of firm size on firms profitability in Nigeria. Journal of Economics and Sustainable Development, 4(5), 90–94. doi:10.5605/IEB.15.4
  • Bank, E. (2018). Analysis of low profit margin and low return on assets. Small Business. Retrieved from http://smallbusiness.chron.com/analysis-low-profit-margin-low-return-assets-76557.html
  • Bartlett, S. A., & Chandler, R. A. (1997). The corporate report and the private shareholder: Lee and tweedie twenty years on. The British Accounting Review, 29(3), 245–261.
  • Beaver, W. H., McNichols, M. F., & Rhie, J. W. (2005). Have financial statements become less informative? Evidence from the ability of financial ratios to predict bankruptcy. Review of Accounting Studies, 10(1), 93–122. doi:10.1007/s11142-004-6341-9
  • Bhagat, S., & Jefferis, R. H. (2005). The econometrics of corporate governance studies. Cambridge, Massachusetts: The MIT Press.
  • Bloom, N., Brynjolfsson, E., Foster, L., Jarmin, R., Patnaik, M., SaportaEksten, I., & Van Reenen, J. (2018). What drives differences in management practices? American Economic Review, 2018, 1–27.
  • Bodie, Z., Kane, A., & Marcus, A. J. (2013). Financial statement analysis, essentials of investments (9th ed., pp. 451–459). New York: McGraw-Hill/Irwin.
  • Bowman, W. (2011). Financial capacity and sustainability of ordinary nonprofits. Nonprofit Management and Leadership, 22(1), 37–51. doi:10.1002/nml.v22.1
  • Brandenburger, A. M., & Stuart, H. W. (1996). Value-based business strategy. Journal of Economics and Management Strategy, 5, 5–24. doi:10.1111/j.1430-9134.1996.00005.x
  • Carmeli, A. (2008). The fiscal distress of local governments in Israel. Administration & Society, 39(8), 984–1007. doi:10.1177/0095399707309358
  • Central Bank of Nigeria. (2008). Statistical bulletin (pp. 19). Garki, Abuja: Golden jubilee edition.
  • Chen, H., Parsley, D. C., & Yang, Y. (2010). Corporate lobbying and financial performance. Journal of Business Finance & Accounting, 42, 41. doi:10.2139/ssrn.1014264
  • Chen, Z., Cheok, C. K., & Rasiah, R. (2016). Corporate tax avoidance and performance: Evidence from China’s listed companies. Institutions and Economies, 8(3), 61–83.
  • Cohen, D., & Zarowin, P. (2010). Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics, 8, 2–19. doi:10.1016/j.jacceco.2010.01.002
  • Costicã, V. (2014). Financial sustainability of the company. Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, 14(1), 775–779.
  • Dechow, P., & Skinner, D. (2000). Earnings management: Reconciling the views of accounting academics, practitioners and regulators. Accounting Horizons, 12, 235–250. doi:10.2308/acch.2000.14.2.235
  • Drucker, P. F. (1963). Managing for business effectiveness. Harvard Business Review, 41, 53–60.
  • Dutta, N. (2015). Top 5 theories of profit explained. Retrieved from http://www.economicsdiscussion.net/profit/top-5-theories-of-profit-explained/6101
  • Egboro, E. M. (2016). The 2008/2009 banking crisis in Nigeria: The hidden trigger of the financial crash. British Journal of Economics, Management & Trade, 12(2), 1–16. doi:10.9734/BJEMT
  • Emmanuel, J. F. (2015). Financial sustainability for nonprofit organizations. New York: Springer publishing company.
  • Enekwe, C. I., Okwo, I. M., & Ordu, M. M. (2013). Financial ratio analysis as a determinant of profitability in Nigerian pharmaceutical industry. International Journal of Business and Management, 8(8), 107–117.
  • Eskandari, J. (2007). Accounting principles. Iran: Tehran Sazman Publishers.
  • Ferreira, M. A., & Vilela, A. S. (2004). Why do firms hold cash? Evidence from EMU countries. European Financial Management, 10(2), 295–319. doi:10.1111/eufm.2004.10.issue-2
  • Fonseka, M. M., García Ramos, C., & Tian, G. L. (2012). The most appropriate sustainable growth rate model for managers and researchers. Journal of Applied Business Research, 28(3), 481. doi:10.19030/jabr.v28i3.6963
  • Gardini, S., & Grossi, G. (2018). What is known and what should be known about factors affecting financial sustainability in the public sector: A literature review. In M. Rodríguez Bolívar & M. López Subires (Eds.), Financial sustainability and intergenerational equity in local governments (pp. 179–205). Hershey, PA: IGI Global. doi:10.4018/978-1-5225-3713-7.ch008
  • Ghyasi, A. (2017). An investigation of the relationship between earnings management and financial ratios (Panel data approach). International Journal of Economics and Financial Issues, 7(1), 608–612.
  • Gill, A., Singh, M., Mathur, N., & Mand, H. S. (2014). The impact of operational efficiency on the future performance of Indian manufacturing firms. International Journal of Economics and Finance, 6(10), 259–269. doi:10.5539/ijef.v6n10p259
  • Graham, J., Harvey, C., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 12, 3–73. doi:10.1016/j.jacceco.2005.01.002
  • Greene, W. H. (2008). Econometric analysis (6th ed.). Upper Saddle River, NJ: Prentice Hall.
  • Gujarati, D. (2004). Basic econometrics. New York City: United States Military Academy, West Point: Tata McGraw-Hill.
  • Haskins, M. E. (2017). Ratios tell a story—2011. Darden Business Publishing Cases, 1–4. doi:10.1108/case.darden.2016.000253
  • Healy, M. P., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 111–119. doi:10.2308/acch.1999.13.4.365
  • Higgins, R. C. (1981). Sustainable growth under inflation. Financial Management, 10, 36–40. doi:10.2307/3665217
  • Hur-Yagba, A. A., Okeji, I. F., & Ayuba, B. (2015). Analyzing financial health of manufacturing companies in Nigeria using multiple discriminate analysis. International Journal of Managerial Studies and Research, 3(7), 72–81.
  • Imhanzenobe, J. O. (2019). Operational efficiency and financial sustainability of listed manufacturing companies in Nigeria. Journal of Accounting and Taxation, 11(1), 17–31. doi:10.5897/JAT2018.0329
  • Jones, S., & Walker, R. G. (2007). Explanators of local distress. Government Abacus, 43(3), 396–418. doi:10.1111/j.1467-6281.2007.00238.x
  • Liang, D., Lu, C. C., Tsai, C. F., & Shih, G. A. (2016). Financial ratios and corporate governance indicators in bankruptcy prediction: A comprehensive study. European Journal of Operational Research, 252(2), 561–572. doi:10.1016/j.ejor.2016.01.012
  • Linares-Mustaros, S., Coenders, G., & Vives-Mestres, M. (2018). Financial performance and distress profiles: From classification according to financial ratios to compositional classification. Advances in Accounting, 40, 1–10. doi:10.1016/j.adiac.2017.10.003
  • Lorig, A. N. (1941). Determining the current financial position of a city. The Accounting Review, 16(1), 41–49.
  • Makadok, R. (2011). The four theories of profit and their joint effects. Journal of Management, 37(5), 1316–1334. doi:10.1177/0149206310385697
  • Maverick, J. B. (2016). What is the best measure of a company’s financial health? Retrieved from https://www.investopedia.com/articles/investing/061916/what-best-measure-companys-financial-health.asp
  • Murphy, C. B. (2018). What are the differences between operating expenses and overhead expenses? Retrieved from https://www.investopedia.com/ask/answers/101314/what-are-differences-between-operating-expenses-and-cost-goods-sold-cogs.asp
  • Murthy, Y., & Sree, R. (2003). A study on financial ratios of major commercial banks. Research Studies, College of Banking & Financial Studies, Sultanate of Oman, 3(2), 490–505.
  • Okoye, L. U., Erin, O. A., Ado, A., & Areghan, I. (2017). Corporate governance and financial sustainability of microfinance institutions in Nigeria. 29th IBIMA conference, Vienna, Austria.
  • Owolabi, S. A., & Obida, S. S. (2012). Liquidity management and corporate profitability: Case study of selected manufacturing companies listed on the Nigerian stock exchange. Business Management Dynamics, 2(2), 10–25.
  • Oyewale, B., & Adewale, B. (2014). Sustainability of microfinance institutions: A comparative case study of Kwara state, Nigeria. Journal of Business and Organizational Development, 6(2), 11–25.
  • Platt, H. D., Platt, M. B., & Chen, G. (1995). Sustainable growth rate of firms in financial distress. Journal of Economics and Finance, 19(2), 147–151. doi:10.1007/BF02920515
  • Pradhan, R. S. (2003). A stability of the consensus of financial ratios as predictors of financial distress in Nepal. In Research in Nepalese finance (pp. 1–10). Kathmandu: Buddha Academic Publishers & Disbributers. doi:10.2139/ssrn.2793424
  • Price Waterhouse Coopers. (2006). National Financial Study of Local Government Sustainability. Commissioned by the Australian Local Government. Sydney, NSW: Author.
  • Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of Activities Manipulation, 19, 335–370.
  • Shaikh, S. (2014). Top 8 theories of profit. Retrieved from http://www.economicsdiscussion.net/theories-of-profit/top-8-theories-of-profit-economics/13939
  • Syversson, C. (2011). What determines productivity? Journal of Economic Literature, 49(2), 326–365. doi:10.1257/jel.49.2.326
  • Teece, D. J. (2017). A capability theory of the firm: An economics and (Strategic) management perspective. New Zealand Economic Papers, 2017, 1–43.
  • Tian, S., & Yu, Y. (2017). Financial ratios and bankruptcy predictions: An international evidence. International Review of Economics and Finance, 51(C), 510–526. doi:10.1016/j.iref.2017.07.025
  • Torres-Reyna, O. (2007). Panel data analysis fixed and random effects using Stata (v. 4.2). Data & Statistical Services, Princeton University, 112, 1–40.
  • Umobong, A. A. (2015). Assessing the impact of liquidity and profitability ratios on growth of profits in pharmaceutical firms in Nigeria. European Journal of Accounting, Auditing and Finance Research, 3(10), 97–114.
  • Walker, F. A. (1887). The source of business profits. The Quarterly Journal of Economics, 1(3), 265–288.
  • Wällstedt, N., Grossi, G., & Almqvist, R. (2014). Organizational solutions for financial sustainability: A comparative case study from the Swedish municipalities. Journal of Public Budgeting, Accounting &. Financial Management, 26(1), 181–218.
  • Wang, X., Dennis, L., & Tu, Y. S. (2007). Measuring financial condition: A study of U.S. states. Public Budgeting & Finance, 27(2), 1–21. doi:10.1111/j.1540-5850.2007.00872.x
  • Watts, R. L., & Zimmerman, J. L. (1990). Positive accounting theory: A ten year perspective. Accounting Review, 65(1), 131–156.
  • Yameen, M., & Pervez, A. (2016). Impact of liquidity, solvency and efficiency on profitability of steel authority of India limited. International Journal of Accounting Research, 2(9), 25–31.
  • Zhu, J. (2000). Multi-factor performance measure model with an application to fortune 500 companies. European Journal of Operational Research. doi:10.1016/S03772217(99)00096-X
  • Zorn, A., Esteves, M., Baur, I., & Lips, M. (2018). Financial ratios as indicators of economic sustainability: A quantitative analysis for Swiss Dairy Farms. Sustainability, 10(8), 2942. doi:10.3390/su10082942